Indo-French giant Alstom plans to make India a hub for its locomotive manufacturing business to capitalise on demand beyond the domestic market; Australia, Sri Lanka, EU and Middle East are up next on its radar of exports from India. ‘Export incentives’ however, is something Bharat Salhotra, MD, Alstom India, feels his company deserves!

Interview by deepak kumar | June 2016 Issue | The Dollar Business

TDB: Alstom has been present in India for the last 100 years and your foothold in the engineering and energy space is strong. How would you sum up Alstom’s experience and journey in the Indian market so far?

Bharat Salhotra (BS): It’s been a great journey. We have grown together with the country, partnering in progress. We made an entry into the Indian rail sector in the 1990s, and today, Alstom has a strong presence in the railways, both in metro and mainline railways. At the moment, we are very strategically and financially focused on the rail space. We have been in India for 100 years, but for the better part of the century, we were more into hydro, power, renewable and nuclear sectors to an extent.

Over the years, there have been obstacles as well as achievements. Several factories and engineering centres were set up. The company has empowered the local teams to perform at their best. There have been multiple acquisitions, mergers and restructuring processes. But all in all, it has been a very productive experience.

TDB: The Indian Railways has finally awarded Alstom with the Madhepura project in Bihar. What is the significance of this contract?

BS: The Madhepura contract has been so far the biggest order for Alstom in India. From the Indian Railways’ point of view, it’s a quantum leap on to a new technology cycle. It will strengthen the capacity of Indian Railways to carry freight. As a part of the deal, we will supply the electric locomotives of 12,000 horsepower (HP) as against the 6,000 HP-locomotives supplied earlier. And with dedicated freight corridor coming up, it will allow separation of freight and passengers trains which will further improve the fluidity of the Indian Railways network.

TDB: Considering that it took time for the contract to come in, did you face any political hurdle or other problems in Bihar?

BS: No, we did not face any problem. Rather, we received support from both the Central and state governments. Madhepura is an agrarian society, thus getting a state-of-the-art locomotive manufacturing plant will be transformational, not just for the district, but for the entire state. Thus, the state is giving us the required support that we need from them. But, again, both the governments have waited for this to happen since 2007, and finally, the dream has been realised. There has been no problem at all.
 
TDB: Are there other projects or international orders in the pipeline?

BS: Soon we will start exporting locomotives to Sydney, again our first order from Australia. We need to demonstrate that we have the capacity to export products out of India, and I have no doubts in terms of our ability. There are a few other projects still pending in the pipeline, and we are looking at India as a production base for reaching beyond the domestic market. We aim to reach out to Asia Pacific, Europe, Middle East, and several other parts of the world, so we are on the look out for newer markets.

TDB: What are the other sets of activities that Alstom is focussing on?

BS: There are 50 cities in the country that are likely to be targeted for insertion of the metro system. Cities such as Ahmedabad, Vijayawada, Trivandrum, Varanasi, Meerut, Kanpur, Agra, Patna, Guwahati, Ludhiana, Nagpur and Bhopal already have plans for the metro rail system, which can be a market for us in the urban landscape. Also, 60,000-km long tracks need to upgrade their existing technology and network. So, from these perspectives, there is a huge opportunity in the urban space. Also, the Indian Railways is looking at upgrading its rolling stock in passenger coaches, and we hope to get an opportunity to upgrade the existing fleet.

TDB: Is Alstom also looking at India’s neighbouring countries for exports?

BS: We are looking at Sri Lanka as an interesting place because they are planning to do some electrification, predominantly in the mainline rail space. We could provide some upgradation services for their existing network. In Colombo, they are looking at our Light Rail Transit (LRT) system, and I am quite keen on that – we are working with the local authorities. In Bangladesh, we had some activities, but that was several years ago.

TDB: Do you import any raw material? Do you have plans to reduce imports to localise manufacturing?

BS: Yes, we do import various items. We import some components and electronic cards because it does not make sense to localise manufacturing of these items. If there is no labour component, then there is no competitive advantage in localising the production! Also, there are some components of the metro train which we will continue to import. We also import our own sub-systems from our own factories situated in different parts of the world. However, we are trying to minimise and limit the quantum of imports.
 
TDB: What percentage of the company’s revenue goes into R&D?

BS: We have a central global R&D budget. Innovation happens on the production floor as a daily activity. But in terms of R&D, it’s centrally focused and driven. We also have a system and a process, by which we all communicate from around the world because Alstom wants to be a global leader in cutting-edge technology.
 
TDB: The rolling stock market is picking up in India and is expected to grow at about 4% year-on-year in near future. How do you plan to compete with others in this space?

BS: There are two aspects of competition! First of all, given the kind of business we are in, it’s difficult to differentiate ourselves from competitors at a product level. Second, since the evaluation criteria is totally driven by cost, whosoever is the lowest in price gets the upper hand. Our strategy is to educate and stay connected with our customers and inform them about the various possibilities of the solutions we have. We are also trying to localise and plan to have a larger supplier base in India.

TDB: What are your expansion plans? Have you set up a target for the future?

BS: We are looking at India as a very important place for growing and expanding our global footprint – in terms of capacity to deliver as well as in terms of the number of the projects we have here. On the supply side, we will continue to invest in India – both in factories and human resources, to bring them to a level of maturity that we see in the global market.  

TDB: How has the Indo-French heritage of the company shaped its business practices in India?

BS: When you are in a country for more than 100 years, you automatically become a part of the whole set up. We have 1,800 employees, out of which only 50 are expats from different parts of the world. We have embraced the best practice of the western world, more notably of France. We have cultivated the French idea of perfection for technology and innovation, and we have got the Indian brainpower and diligence. We bring the two cultures together and come up with good products and solutions, which enable us to serve the country in the long run. Alstom is an excellent example of Indo-French partnership.
 
TDB: What support do you expect from the government?

BS: What we actually want from the government is support in the Make in India mission. The government needs to recognise and support companies, howsoever new they are, to stay and grow. If a company is supplying anything from India, it should get an advantage in the form of incentives. On one hand, the government is promoting Make in India, while on the other hand, procurement process, procurement structure, and the way the qualification happens at times goes against us. In Madhepura project, we bid as a local Indian entity, but we could use the credentials of the parent or our associates around the world. And that’s how we were able to successfully win this contract. That’s a demonstration of Make in India.

TDB: Do you think that the current government will be able to deliver better result than the previous one?

BS: The intent of the government is visible in whatever it has done and said. To operationalise its intent, it will take some time, but we are certainly on course for a better future.